Indiana Senate approves income tax cut. Here's how much you would save.
The Indiana Senate approved a bill Tuesday that could reduce Hoosiers' income taxes, bringing Indiana closer to becoming a no-income-tax state.
A family making about $70,000, the median household income in Indiana, could save about $140 in income taxes per year starting in 2030 under Senate Bill 451 from Sen. Travis Holdman, R-Markle. Someone making $100,000 could save about $200.
Per state law, the income tax rate is already decreasing over the next five years until it reaches 2.9% in 2027. Senate Bill 451 would lower it further to 2.85% in 2030, but only if state revenue grows more than 3% year-to-year.
The income tax rate would lower further in even years beyond 2030 if state revenues continue to grow above that pace.
Holdman's bill allows the income tax rate to completely phase out, but that would take more than 100 years. The bill also leaves the door open for lawmakers to act in the future, he said.
"If the legislature wants to, they can suspend the income tax rate reduction during odd numbered session years," Holdman said in a statement to IndyStar.
According to a fiscal analysis of the bill, the initial income tax cut in 2030 would cost the state $76 million per year.
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Holdman has in the past said he wants to eliminate the state income tax. In 2023, the senator carried a bill, which created the task force that studied state and local income taxes over the last two years.
Representatives from the Indiana Chamber of Commerce and the Indiana Manufacturers Association testified in support of the bill in a Senate committee hearing last week, saying it would provide relief to Hoosiers and make Indiana more competitive with states around the country.
The bill unanimously passed the Indiana Senate on Tuesday. It now heads to the House where lawmakers could amend the proposal.
2025 lndiana Legislative Session: Lawmakers could cut taxes in 2025. Here's what to expect
Contact IndyStar state government and politics reporter Brittany Carloni at brittany.carloni@indystar.com or 317-779-4468. Follow her on Twitter/X@CarloniBrittany.
This article originally appeared on Indianapolis Star: Indiana Senate approves income tax cut. Here's how much you would save
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